Selling Wine In Bond vs. Duty Paid: What You Need to Know

Selling wine in bond means you are trading wine where UK excise duty and Value Added Tax (VAT) remain suspended. That status offers distinct advantages for both sellers and buyers in the fine wine market. It allows wine to sit in an approved excise warehouse without these taxes being paid. The arrangement is particularly attractive for international transactions, or for buyers who intend to keep the wine for future consumption or resale. When you sell wine that is in bond, the buyer assumes the responsibility for paying the duty and VAT. That applies if they choose to remove it from the warehouse for consumption in the UK. This contrasts with duty paid wine, where these taxes have already been settled, often limiting its appeal to a domestic market. Understanding these differences is crucial for maximizing your net proceeds when deciding to sell your collection.

What does "in bond" mean for wine storage?

"In bond" refers to wine that sits in an HMRC-approved excise warehouse, where UK excise duty and VAT remain unpaid. HMRC states that an approved business needs to hold and move excise goods in duty suspension within the UK. HMRC approves these premises to receive and store specific types of goods. Examples include general storage and distribution warehouses or trade facility warehouses, as detailed in HMRC's Excise Notice 197.

When duty-suspended goods are received into an excise warehouse, they are deemed warehoused once they physically enter the approved area. The warehousekeeper must place the goods in the warehouse without delay and enter them into stock account records. The goods must also be marked in line with agreed procedures, according to HMRC's Excise Notice 197. This system keeps the wine's tax status clearly defined and maintained until the wine leaves the warehouse for consumption or export. For more on proper storage, see our guide on how to store wine.

What are the tax implications of selling wine in bond?

Selling wine in bond means that you, as the seller, do not incur or pay the UK excise duty or VAT. Instead, these taxes remain suspended, transferring the liability to the new owner when the wine is eventually removed from the excise warehouse for home use. Owners of duty-suspended excise goods held in a warehouse may sell their goods in duty suspension at any time, as stated in HMRC's Excise Notice 197. Before making any sale, the current owner should inform the warehousekeeper of the sale and provide details of the new owner, according to HMRC's Excise Notice 197.

This tax-suspended status can significantly impact the wine's marketability and value. That is particularly true for buyers located outside the UK, or for those who intend to hold the wine as an investment. It allows for a cleaner transaction without the immediate burden of UK consumption taxes.

How does Value Added Tax (VAT) apply to wine sales?

Value Added Tax (VAT) is a consumption tax applied to goods and services. GOV.UK states that the standard VAT rate is 20% for most goods and services. While wine sits in bond, VAT stays suspended and remains unpaid. This suspension continues as long as the wine remains in an approved excise warehouse.

VAT becomes payable when the wine leaves bond for consumption within the UK. The person removing the goods for home use is responsible for accounting for the VAT. HMRC's Excise Notice 197 notes a gap in the Excise Movement and Control System (EMCS). It does not contain information about whether goods have been subject to a previous sale in a warehouse that could affect their VAT status. Any commercial documents accompanying the load should carry this information. If you are unsure about the VAT status of goods, you should contact the dispatching warehousekeeper, according to HMRC's Excise Notice 197.

How does alcohol duty apply to wine sales?

Alcohol duty is a specific excise tax levied on alcoholic products. For wine, the amount of duty depends on its Alcohol by Volume (ABV). HMRC sets the rates of duty for wine and calculates them per litre of pure alcohol in the product. For example, take wine (including sparkling wine) with an ABV between 8.5% and 22%. It carries an alcohol duty rate of £30.62 for each litre of pure alcohol in the product, as published by HM Revenue & Customs.

Similar to VAT, alcohol duty stays suspended for wine held in bond. It only becomes payable when the wine leaves an approved excise warehouse for home use. The warehousekeeper must submit the appropriate warrants to HMRC to account for the duty. This applies when goods are removed for home use, as detailed in HMRC's Excise Notice 197. This can be done via deferred payment arrangements or immediate payment.

What are the advantages of selling wine in bond?

Selling wine in bond offers several advantages, particularly for high-value fine wines.

• Wider Market Appeal: Wine in bond appeals to a broader range of buyers, including international collectors, merchants, and investors, as they can purchase the wine without immediately incurring UK duty and VAT. This is especially relevant for those who plan to export the wine or keep it in bond for investment purposes.
• Deferred Tax Liability: For the buyer, purchasing wine in bond means they defer the payment of duty and VAT until the wine leaves the warehouse for consumption. This can improve cash flow and make the purchase more attractive.
• Simplified Selling Process: As a seller, you avoid the administrative burden and financial outlay of paying duty and VAT. The transaction is cleaner, as the tax liability transfers with the wine to the new owner.
• Maintained Provenance and Condition: Keeping wine in an HMRC-approved excise warehouse puts it in professional, climate-controlled conditions, which helps maintain its quality and provenance. This can be a significant selling point for discerning buyers. For more on condition, read our guide on wine ullage levels explained.
• Investment Flexibility: For those treating wine as an asset, selling in bond maintains its status as a tax-efficient investment, allowing those owners to trade it without triggering immediate tax points. Learn more about fine wine investment.

What are the considerations when selling wine in bond?

While selling wine in bond offers benefits, there are also factors to consider.

• Buyer Pool: The in bond status broadens the international market. It might also narrow the domestic market to buyers who have their own in bond storage facilities, or who are comfortable with the process of paying duty and VAT upon removal. Buyers seeking wine for immediate home consumption might prefer duty paid options for simplicity.
• Movement Guarantees: Duty-suspended movements require a movement guarantee. This financial security protects the revenue at risk. The guarantee provider could be the dispatching warehousekeeper, registered consignor, transporter, owner, or consignee. That provider is liable for any excise duty that becomes due if an irregularity occurs during the movement, as stated in HMRC's Excise Notice 197. Your liability as the guarantee provider is not restricted to your guarantee amount, according to HMRC's Excise Notice 197.
• Logistics for Buyers: The buyer of in bond wine must arrange for continued in bond storage or for the payment of duty and VAT if they wish to take physical possession. This adds a layer of complexity compared to purchasing duty paid wine.
• Auction Costs: When selling through an auction house like Christie's, the buyer will pay a buyer's premium. Christie's charges a premium of 25% of the final bid price for wine, with taxes payable on the premium at the applicable rate, according to Christie's New York Conditions of Sale. This is a cost to the buyer, which affects their total outlay.

How do auctions handle in bond wine sales?

Auction houses facilitate the sale of both in bond and duty paid wines, but specific conditions apply, particularly regarding taxes and logistics. Christie's, for example, charges a buyer's premium of 25% of the final bid price for wine. Taxes are payable on this premium, as detailed in Christie's New York Conditions of Sale.

For sales conducted in New York, Christie's collects New York sales tax at a rate of 8.875% for any lot collected from Christie's in New York. For shipments to other states and all international locations, Christie's collects New York sales tax at 8.875%. Exceptions apply when specific freight forwarder conditions are met or a tax exemption is on file, according to Christie's New York Conditions of Sale. Buyers are responsible for obtaining any necessary export or import licenses for their purchases. The denial of a license or delays in obtaining one does not justify rescinding a sale or delaying payment, as stated by Christie's New York Conditions of Sale.

The risk and responsibility for the lot pass to the buyer seven calendar days from the date of the sale, or upon collection by the buyer, whichever is earlier. That is according to Christie's New York Conditions of Sale. This means that even if the wine remains in bond, the buyer is responsible for it after this period. For more on selling through auctions, consult our guide on how to sell fine wine.

What are the requirements for moving and storing in bond wine?

Storing and moving wine in bond involves specific regulatory requirements to maintain its duty-suspended status.

• Approved Premises: Wine must sit in an HMRC-approved excise warehouse. HMRC authorizes these premises to hold and move excise goods in duty suspension, as outlined in HMRC's Excise Notice 197.
• Excise Movement and Control System (EMCS): All intra-UK movements of duty-suspended alcoholic products must be recorded and validated using EMCS. This electronic system generates an electronic administrative document (eAD) with a unique Administrative Reference Code (ARC) that must travel with the goods, according to HMRC's Excise Notice 197.
• Report of Receipt: When the consignee receives the goods, they must check the consignment against the eAD. They must then submit a report of receipt on EMCS within 5 days of receiving the goods, making sure any excesses, shortages, or losses are included, as per HMRC's Excise Notice 197. Failure to do so can result in financial penalties.
• Movement Guarantee: A movement guarantee is required to cover any excise duty-suspended movement started by a UK warehousekeeper or registered consignor. This guarantee protects the revenue at risk. The guarantee amount is normally based on the amount of duty suspended on an average week's movements, with a minimum level of £20,000. Exceptions for smaller infrequent consignments exist, as stated in HMRC's Excise Notice 197. The guarantee provider is liable for the duty if an irregularity occurs during the movement. "In general, the liability to pay the duty on goods which fail to reach the consignee falls upon the person who provided the financial security for the movement," according to HMRC's Excise Notice 197.

In Bond vs. Duty Paid: A Comparison

Understanding the key differences between selling wine in bond and duty paid is essential for making informed decisions.

Feature	In Bond Wine	Duty Paid Wine
Excise duty and VAT	Suspended for as long as the wine stays in an HMRC-approved excise warehouse	Already settled
Who carries the liability	The new owner, once the wine is removed from the warehouse for home use	The seller, who paid before the sale
Where it appeals	International collectors, merchants and investors, and buyers with their own in bond storage	Buyers seeking wine for immediate home consumption

You can work the taxes through for a specific case with our all-in cost calculator and check where the wine sits in the wider market on our live fine wine market index.

What does "in bond" mean for wine storage?

What are the tax implications of selling wine in bond?

How does Value Added Tax (VAT) apply to wine sales?

VAT becomes payable when the wine leaves bond for consumption within the UK. The person removing the goods for home use is responsible for accounting for the VAT. HMRC's Excise Notice 197 notes a gap in the Excise Movement and Control System (EMCS). It does not contain information about whether goods are, or have been, subject to a previous sale in a warehouse that could affect the VAT status of the goods. Any commercial documents accompanying the load should carry this information. If you are unsure about the VAT status of goods, you should contact the dispatching warehousekeeper, according to HMRC's Excise Notice 197.

How does alcohol duty apply to wine sales?

Similar to VAT, alcohol duty stays suspended for wine held in bond. It only becomes payable when the wine leaves an approved excise warehouse for home use. The warehousekeeper must submit the appropriate warrants to HMRC to account for the duty. This applies when goods are removed for home use, as detailed in HMRC's Excise Notice 197. This can be done via deferred payment arrangements or immediate payment. You can estimate your costs using our all-in cost calculator.

What are the advantages of selling wine in bond?

Selling wine in bond offers several advantages, particularly for high-value fine wines.

• Wider Market Appeal: Wine in bond appeals to a broader range of buyers, including international collectors, merchants, and investors, as they can purchase the wine without immediately incurring UK duty and VAT. This is especially relevant for those who plan to export the wine or keep it in bond for investment purposes.
• Deferred Tax Liability: For the buyer, purchasing wine in bond means they defer the payment of duty and VAT until the wine leaves the warehouse for consumption. This can improve cash flow and make the purchase more attractive.
• Simplified Selling Process: As a seller, you avoid the administrative burden and financial outlay of paying duty and VAT. The transaction is cleaner, as the tax liability transfers with the wine to the new owner.
• Maintained Provenance and Condition: Keeping wine in an HMRC-approved excise warehouse puts it in professional, climate-controlled conditions, which helps maintain its quality and provenance. This can be a significant selling point for discerning buyers. For more on condition, read our guide on wine ullage levels explained.
• Investment Flexibility: For those treating wine as an asset, selling in bond maintains its status as a tax-efficient investment, allowing those owners to trade it without triggering immediate tax points. Learn more about fine wine investment.

What are the considerations when selling wine in bond?

While selling wine in bond offers benefits, there are also factors to consider.

• Buyer Pool: The in bond status broadens the international market. It might also narrow the domestic market to buyers who have their own in bond storage facilities, or who are comfortable with the process of paying duty and VAT upon removal. Buyers seeking wine for immediate home consumption might prefer duty paid options for simplicity.
• Movement Guarantees: Duty-suspended movements require a movement guarantee. This financial security protects the revenue at risk. The guarantee provider could be the dispatching warehousekeeper, registered consignor, transporter, owner, or consignee. That provider is liable for any excise duty that becomes due if an irregularity occurs during the movement, as stated in HMRC's Excise Notice 197. Your liability as the guarantee provider is not restricted to your guarantee amount, according to HMRC's Excise Notice 197.
• Logistics for Buyers: The buyer of in bond wine must arrange for continued in bond storage or for the payment of duty and VAT if they wish to take physical possession. This adds a layer of complexity compared to purchasing duty paid wine.
• Auction Costs: When selling through an auction house like Christie's, the buyer will pay a buyer's premium. Christie's charges a premium of 25% of the final bid price for wine, with taxes payable on the premium at the applicable rate, according to Christie's New York Conditions of Sale. This is a cost to the buyer, which affects their total outlay.

How do auctions handle in bond wine sales?

What are the requirements for moving and storing in bond wine?

Storing and moving wine in bond involves specific regulatory requirements to maintain its duty-suspended status.

• Approved Premises: Wine must sit in an HMRC-approved excise warehouse. HMRC authorizes these premises to hold and move excise goods in duty suspension, as outlined in HMRC's Excise Notice 197.
• Excise Movement and Control System (EMCS): All intra-UK movements of duty-suspended alcoholic products must be recorded and validated using EMCS. This electronic system generates an electronic administrative document (eAD) with a unique Administrative Reference Code (ARC) that must travel with the goods, according to HMRC's Excise Notice 197. The consignee must submit a report of receipt on EMCS no later than 5 days after receiving the goods, making sure any results from their checks are included, as per HMRC's Excise Notice 197.
• Movement Guarantee: A movement guarantee is required to cover any excise duty-suspended movement started by a UK warehousekeeper or registered consignor. This guarantee protects the revenue at risk. The guarantee amount is normally based on the amount of duty suspended on an average week's movements, with a minimum level of £20,000. For new businesses, calculations are based on expected duty suspended. In exceptional cases, a movement guarantee for less than £20,000 may be issued for small, infrequent consignments, as stated in HMRC's Excise Notice 197. The guarantee provider is liable for the duty if an irregularity occurs during the movement. "In general, the liability to pay the duty on goods which fail to reach the consignee falls upon the person who provided the financial security for the movement," according to HMRC's Excise Notice 197.

In Bond vs. Duty Paid: A Comparison

Understanding the key differences between selling wine in bond and duty paid is essential for making informed decisions.